Ollie's Bargain Outlet (OLLI) - 2025 Q4 - Annual Report

Store Expansion and Growth - Store count increased from 388 to 559, representing a compound annual growth rate (CAGR) of 9.5%[26] - The company plans to expand its store base significantly, with potential for over 1,300 national locations[31] - As of February 1, 2025, the company operated 559 stores, with a target to increase to over 1,300 locations based on internal estimates[53][58] - The company plans to open 75 new stores in the upcoming year, prioritizing locations acquired through bankruptcy auctions[55] - The company opened 50 new stores in the last fiscal year, totaling 227 new stores over the past five fiscal years, indicating ongoing expansion efforts[115] Financial Performance - Net sales rose from $1.809 billion to$2.272 billion, achieving a CAGR of 5.9%[26] - Comparable store sales grew at an average rate of 2.0% per year[26] - The company targets first-year annual new store sales of approximately $4.0 million, with a consistent payback period of about two years for new stores[62] - Average annual net sales per store were reported at$4.3 million over the past five years[209] - From 2020 to 2024, net sales grew at a CAGR of 5.9%, with plans for continued growth through new store openings and quality merchandise[214] Customer Engagement and Loyalty - Ollie's Army loyalty program reached 15.1 million members, with over 82% of sales coming from these members in 2024[28] - The company launched a co-branded credit card to enhance the Ollie's Army loyalty program and increase customer spending[34] - Ollie's Army loyalty program has 15.1 million members, accounting for over 82% of net sales, with members spending approximately 40% more per shopping trip than non-members[69] - The company announced a partnership with Sunbit to launch a co-branded Visa® credit card, which aims to enhance customer loyalty but poses reputational risks if not executed properly[128] Merchandise and Supplier Relationships - Brand name closeout merchandise accounted for approximately 65% of the retail value of 2024 merchandise purchases[23] - Non-closeout and private label products accounted for approximately 35% of the retail value of merchandise purchases in 2024[45] - The company aims to enhance supplier relationships to increase the assortment of brand name closeout products[33] - The company sources from over 1,200 suppliers, with an average relationship of over 15 years with the top 15 suppliers[49] - The company’s competitive advantage lies in direct buying relationships with major manufacturers, which enhances access to brand name closeout products[216] Operational Efficiency and Distribution - The company operates four distribution centers, supplying approximately 95% of merchandise to stores, with the newest center in Princeton, IL supporting up to 750 stores[51][52] - The company maintains distribution centers in York, PA, Commerce, GA, Lancaster, TX, and Princeton, IL, to support existing and new stores, with potential risks of processing delays affecting inventory and sales growth[119] - The company has invested in expanding its distribution network to 3.0 million square feet and enhancing information technology systems[212] Workforce and Culture - As of February 1, 2025, the company employed over 12,800 associates, with approximately 60% self-identified female and over 40% from racial or ethnic minority backgrounds[82] - The company has a "promote-from-within" culture, with over 60% of current district team leaders and field positions filled by internal promotions in 2024[85] - The company is committed to providing market-competitive compensation and offers various bonus incentive programs based on performance[86] - The company faces challenges in attracting and retaining qualified associates in stores and distribution centers, which may affect sales and operational performance[123] Risks and Challenges - The company faces risks related to supply chain disruptions, which could impact inventory availability and customer satisfaction[97] - Labor shortages and increased turnover have led to higher costs, including overtime and wage increases, which could negatively impact operational efficiency[110] - The company faces intense competition from a variety of retailers, which could limit growth opportunities and adversely affect financial performance[111] - Future increases in costs, such as labor and shipping rates, may reduce profitability due to the company's low-price model[103] - The company may struggle to retain customer loyalty, particularly among members of Ollie's Army, due to intensified competition and alternative shopping options[117] Cybersecurity and Compliance - The company’s cybersecurity program includes regular assessments and testing of policies to address cybersecurity threats[179] - The company maintains a comprehensive cybersecurity program, including incident response and recovery plans that are regularly tested[190] - The company is compliant with PCI standards, but future compliance may incur additional expenses and challenges[144] - Data protection requirements are increasing operating costs, and breaches could lead to significant fines and reputational damage[147] Financial Management and Stock Performance - The company has a five-year $100.0 million revolving credit facility, with$85.8 million of borrowing availability as of February 1, 2025[170] - The stock price fluctuated from a high of $120.03 to a low of$68.05 during the fiscal year ended February 1, 2025[164] - The company has authorized a share repurchase program with an aggregate of $400 million, with approximately$32.7 million remaining as of the end of the 2024 fiscal year[176] - The company does not expect to pay any cash dividends for the foreseeable future due to substantial funding requirements for business operations[166]